• Simple case notification withdrawn in late December
• New filing lodged under normal procedure
• Deal yet to be accepted for review by SAMR

Anglo American’s proposed CAD 32.58bn (USD 23.56bn) share exchange acquisition of Teck Resources will be handled by China’s merger regulator under the normal procedure, according to two sources familiar with the matter.

The UK-listed mining giant withdrew its simple case notification of the proposed Teck transaction in late December, according to the first source. Anglo American subsequently submitted a new filing to China’s State Administration for Market Regulation (SAMR) under the normal procedure, the first and second sources said.

SAMR has yet to accept the normal case filing of the deal, the first source added. The deal is likely to face industry concerns in China, according to the second source.

As reported, Anglo American previously sought a simple case review on the basis that the parties’ combined market share in copper production is below 5%, as per data cited by an Anglo American spokesperson and referenced in this news service’s analysis.

Under SAMR’s rules, a horizontal transaction may qualify for a simple case if the parties’ combined market share in the relevant market is below 15%.

However, SAMR retains full discretion in determining whether a transaction qualifies for a simplified review. As stipulated in Article 20 of the Provisions on the Examination of Concentration of Undertakings, even transactions that fall within simple case market share thresholds under Article 19 may still be required to undergo a normal case review if they are deemed to potentially harm competition, adversely affect consumers or other relevant undertakings, or impede the development of the national economy.

Copper resources are considered strategically important to China’s national security and economy, according to an article published by the state media People’s Daily in February.

Available data suggests that market shares among leading producers in the copper ore concentrate market are relatively low, according to the third source. However, the source indicated that SAMR’s approach to this review would include considerations beyond the deal parties’ relatively limited global market shares.

The 2011 precedent acquisition of Xstrata by Glencore was heavily scrutinized by China’s then merger regulator, MOFCOM, before gaining conditional approval. The regulator noted that Glencore and Xstrata accounted for just 1.5% and 6.1% of the global copper concentrate production respectively but that this still created the third largest global sector player by market share.

MOFCOM said the deal would strengthen Glencore’s control over copper concentrate production, supply and trading markets and accordingly required a mix of structural and behavioral remedies.

A spokesperson with Anglo American told this news service that the company is making the appropriate filings in all relevant jurisdictions, and it does not comment on specifics.

Teck’s spokesperson said the company does not comment on the regulatory process.

SAMR does not comment on ongoing deals.